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Trademarks, domain name wars, and the birth of cybersquatting remedies

Mark Sableman July 19, 2013

Trademarks lie at the heart of our market society, so it’s not surprising that they’ve been important on the Internet since it first went commercial. While the principles of trademark law apply equally in the online and bricks-and-mortar worlds, there’s a twist to how trademark use is regulated within Internet domain names.

The Business Law Basics

Trademarks are source identifiers — they identify the producers of the products and services that consumers have come to love. That source identification helps the marketplace to function efficiently. Buyers can identify the products and services they like, and the producers and providers they trust. Manufacturers can distinguish their goods from those of competitors, and they are incentivized to maintain product quality and build customer brand loyalty. 

Almost any symbol can serve as a trademark. A trademark can be a letter, a word, a phrase, or a slogan. It can consist of stylized words, pictures, or other graphic symbols. It can even be a sound, a color, or a combination of elements, like a package or restaurant design, or a product configuration. (Trademarks, by the way, technically identify only products. Service marks identify services, and trade names (business names), are technically a third category, although they often function somewhat like trademarks. The umbrella term “trademark” is often used loosely for all three.)

Trademarks become protected in the United States primarily from actual use in the marketplace. Once you begin using your trademark for your goods, you’ll have common law trademark rights in the geographic area of your use. Rights are based on priority of use; a “senior” user’s trademark beats a “junior” user’s trademark if the marks are the same or closely similar. You can, if you wish, apply for a state trademark registration, to give notice of your rights within your state (although the actual rights you’ll acquire from state registration often don’t extend beyond common law rights). Or you can apply for a federal trademark registration, which, if issued, confers significant national trademark rights, including nationwide priority, and incontestability (invulnerability from certain defenses) after five years.

A trademark owner has the right to prevent others from using similar marks that are likely to confuse consumers. The purpose of trademark law is to protect consumers — to ensure that they can identify products of trusted origin. Confusingly similar trademarks defeat that purpose. Of course, consumers rarely enforce trademark law; trademark owners do that, since trademark owners acting in their own best interest will protect the marketplace from confusingly similar marks.

Trademark infringement is judged on a “likelihood of confusion” standard, seen from an ordinary consumer’s point of view. No hard-and-fast rules apply; every case is evaluated based on multiple factors, including the similarity of the marks (in sight, sound, and meaning), the similarity of the goods and services on which they are used, and various marketplace considerations such as the sophistication of consumers, buying conditions, and other trademarks used in that area of commerce.

Some trademarks are additionally protected against “dilution” as well as infringement. Dilution occurs when a junior trademark doesn’t quite create a likelihood of confusion with the senior one, but nonetheless blurs its distinctiveness, or tarnishes its image. For federal dilution protection, a mark must be nationally famous, although certain states grant dilution protection even in the absence of fame.

Can anyone other than a trademark owner ever use a trademark? As Justice Oliver Wendell Holmes once famously observed, a trademark “is not taboo.” Trademark “fair use” and “nominative” use is fully permitted, and often occurs in situations where the use of the mark doesn’t create a likelihood of confusion as to its source, or (in places where dilution laws apply) doesn’t dilute another mark. Using a trademarked word in its descriptive non-trademark sense (“I sell apples”— if you mean the fruit, not the computer) is perfectly permissible. And using a trademark to identify something (nominative use), is also permissible and happens all the time. (“I took my family to Disney World, we ate at McDonald’s, and at the end of the day we collapsed at the Marriot.”)

The Internet Law Twist

Trademarks are valuable. Internet visibility is valuable. And an early Internet policy decision limited prime commercial space on the Internet to the famous “dot com” top level domain. The combination of these three elements led to the legendary cyber-land rush of the late 1990s, which in turn led to a trademark-based Internet legal twist — the laws and procedures regulating cyber-squatting.

The early day of cyberspace, as Internet space was then known, recalled the Wild West. Valuable cyber-land — specifically, dot-com names (and to a lesser extent, dot-org names) — were up for grabs. Conflicts and potential conflicts abounded. Where two companies owned the same trademark (like DELTA for faucets and for airlines), which one would get the dot-com mark (e.g., delta.com)? Could an adversary usurp an obvious dot-com or dot-org domain, as when a Planned Parenthood opponent acquired plannedparenthood.org, or when peta.org was registered not by People for Ethical Treatment of Animals but an obviously antagonistic People for Eating Tasty Animals? Could anyone register technicolor.com, americanairlines.com, and unitedairlines.com, and then hold out for the best price when the trademark owners sought to obtain those domains for themselves?

Trademark laws simply couldn’t handle these disputes. The likelihood of widespread confusion generally wasn’t the issue; the issue was the legality and ethics of domain name land grabs. The company that originally handed out domain names was equally stumped; its attempts to bring sanity to the process were feeble and ineffective. Both the U.S. Congress and the entity that took over the Internet domain name process, the Internet Authority for Assigned Names and Numbers (ICANN), responded with special procedures and remedies for what became known as “cybersquatting.”

Both the Anticybersquatting Consumer Protection Act (ACPA), passed by Congress in 1998, and the Uniform Dispute Resolution Procedure (UDRP), required as part of all domain name registration contracts since 1999, addressed cybersquatting, defined as the registration or use of a domain name in bad faith and for profit. Under the ACPA, you could sue in court to recover a domain name registered by a cybersquatter. Under the UDRP, you could invoke a special cybersquatting dispute resolution procedure, even against a cybersquatter halfway around the world, one who is not amenable to suit in the United States. Both were altogether new remedies, creating an altogether new twist on trademark law  in that special place: cyberspace. 

Mark Sableman is a partner in Thompson Coburn’s Intellectual Property group. He is the editorial director of Internet Law Twists & Turns. You can find Mark on Twitter, and reach him at  (314) 552-6103 or msableman@thompsoncoburn.com.